Snowflake (NYSE:SNOW) shares jumped almost 16% during trading last Thursday due to better than expected results. With the cloud computing data company being pointed to as an example of the future, I’m interested to see whether it merits an investment right now. After all, legendary investor Warren Buffett holds the shares via his company Berkshire Hathaway.

A young company with potential value

Snowflake is an interesting business. The name reportedly comes from the founder’s passion for winter snow sports and is unrelated to the actual business operations. The company allows users to store data in the cloud, as well as analyse the data stored there. This becomes a powerful tool, especially in the business-to-business sales space.

The firm has seen rapid growth since being formed back in 2012. It went public in the US in late 2020 at $120 and rallied strongly in the first couple of months of trading. Buffett bought at this $120 level with his Snowflake shares worth $730m at the time. With the current share price at $345, he has almost tripled his original investment amount.

In my opinion, his decision to invest in Snowflake does add weight to the thinking that the company has good value. His investing approach has been to find companies with good long-term value. He isn’t the type of person who puts in some money with the aim of selling after a few months. So if he’s holding Snowflake shares for years to come, it points to there being more upside value to be had.

Financials offer risk and reward

Growth was seen in the recent Q3 results, the main reason why Snowflake shares gained so much attention late last week. Revenue was up 110% year-on-year at $334.4m. Given the nature of the cloud storage platform, Snowflake really wants to grow the customer base. Once you’re on the cloud, it makes the customer much stickier and likely to stay with Snowflake for the future.

To this end, the results showed a strong customer base of 5,416 accounts. Some 148 customers generated revenue greater than $1m over the past year. If customer growth stays strong then I think Snowflake could do very well.

One risk I see is that the business is generating losses. It’s a classic model of a technology company that’s losing money now but has the vision to hopefully break even and become profitable in years to come. Snowflake shares reflect this future outlook. Yet the risk is that it doesn’t grow to scale and reach profitability. If this is the case, then the shares are clearly overvalued at current levels.

Considering value in Snowflake shares

Snowflake shares might only be up 16% since the start of 2021, but they’re up almost 300% since the IPO last autumn. I do think that the shares are a little expensive, given the financials of the business. Yet having Buffett on board is a powerful thing. Given his investment strategy, I’d be happy to buy some shares now to hold for long-term upside and am thinking about doing so.

Jon Smith and The Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As a veteran value investor, I’m always looking out for cheap stocks and shares. In particular, I try to track down shares that pay generous dividends to shareholders. Dividends are regular cash payments paid to shareholders by companies, usually half-yearly or quarterly. For me, share dividends are the closest thing to free money I’ve ever had. And as American business tycoon John D Rockefeller once remarked: “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” What’s more, reinvested dividends can account for roughly half of the long-term returns from UK shares. Here are 10 FTSE 100 shares that pay bumper cash dividends to patient shareholders.

10 huge FTSE 100 dividends

On Friday, the FTSE 100 closed at 7,122.32 points. At this level, the index has a forecast dividend yield of 4.1% for 2021. However, at least 12 FTSE 100 stocks don’t pay dividends to shareholders. Also, dividend yields vary widely across the remaining 89 Footsie shares (one company has a dual listing).

The good news is that some large FTSE 100 firms pay generous dividends to shareholders. Indeed, I count at least 17 Footsie stocks with dividend yields of 5%+ a year. Here are 10 stocks that I don’t own today that pay some of the highest dividend yields in the London Stock Exchange.

As you can see, dividend yields at these 10 FTSE 100 firms range from 13% a year at global steelmaker and miner Evraz to 6.2% a year at Legal & General. What’s more, two other mining stocks offer double-digit dividend yields (10.8% at Rio Tinto and 10.7% a year at BHP Group).

Across all 10 high-yielding shares, the average dividend yield is 9% a year. In other words, if I invested £1,000 into each stock, I could expect yearly dividends of £900 as long as that rate was maintained. Not bad, given we live in a world of ultra-low and negative interest rates. After all, the dividend yields on offer are market-beating right across the board. But I wouldn’t build an entire portfolio from just these 10 FTSE 100 stocks. Why?

Now for the bad news

First, a portfolio consisting of only these 10 FTSE 100 shares would be highly concentrated. Four members are miners, two are tobacco companies, two are financial firms and the two remaining stocks are housebuilder Persimmon and telecoms giant Vodafone. For me, this portfolio wouldn’t be diversified enough, so I’d consider it far too risky.

Second, I would expect such a portfolio to be rather volatile. Metals prices and mining stocks are notoriously volatile, which could generate wild swings in the portfolio’s value. Likewise, tobacco stocks sometimes fall out of favour, as do financial shares. Third, share dividends aren’t guaranteed, so they can be cut or cancelled at any time. Indeed, from the list above, Rio Tinto cut its dividend in 2016, BHP did so in 2016 and 2020, while Evraz cut in 2012, 2013, 2014 and 2020. And many FTSE 100 companies withdrew dividends in Covid-hit 2020.

Nevertheless, were I to start buying more high-yielding stocks, these FTSE 100 shares would be prime candidates on my list today. As I said earlier, there’s nothing quite like getting free money from dividends!

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco and Imperial Brands. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

With global financial markets seeing higher volatility than normal, some stocks are seeing their share prices slump. One example at the moment is Carnival (LSE:CCL). The Carnival share price dropped 14% last week, to close at 1,203p on Friday. This made it one of the worst performers over this period. With the shares also down 18% over a year, how low does the stock need to go before it becomes an undervalued buy for me?

Omicron stunting demand

It’s unsurprising that the Carnival share price performed badly last week given the latest Covid-19 news. The new strain, Omicron, is worrying the WHO along with governments around the world. From the first identification in Africa, cases have now been seen globally, including here in the UK.

The domino effect is that travel restrictions are being tightened up with more tests now needed to travel abroad. This is bad for Carnival, as a global cruise line operator. Not only will people find it more difficult to take a cruise at the moment, but some are unlikely to even want to book such a trip.

Negative sentiment means that Carnival could see lower demand even for bookings that could be placed well in advance. At the moment, we don’t know what the picture will look like next summer, so committing to a cruise in this environment is a tough ask. I also need to remember that the broad target audience for Carnival is middle-aged and older. This set of clients is likely to be more cautious than younger travellers.

Carnival shares could continue to struggle

A the moment, Carnival shares are trading just above their low of the past year, a level seen in February (again when the outlook was bleak). If they go below 1,000p, then then they’d be on track to move below the lows seen in 2020, which in turn were the lows of the past decade.

So it’s clear that at 1,200p, the Carnival share price is low when looking at historical prices. But this doesn’t mean that it’s undervalued. The latest Q3 results showed that occupancy on its cruises was increasing. This went from 39% in June to 59% in August.

Yet even with eight of the nine cruise brands offering some kind of service, it’s still too early to gauge demand properly. This is because “many cruises, while generating positive cash flow, were limited to scenic cruises without ports of call, and generally priced well below the attractive destination-rich cruises we normally offer,” the company said.

So what I see here is a business that’s uncertain of demand, posting a quarterly net loss of $2bn. This is before the variant news hit! So personally I think the Carnival share price accurately reflects the current position that the business is in and isn’t undervalued.

There could be rich rewards for investors that have a high risk-tolerance. If Omicron is an over-reaction, and if demand for cruises rises sharply, the shares should rally. For me, this probability is too small right now, so I won’t be investing.

Jon Smith and The Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The Nasdaq index is known for including a ton of tech stocks. These include Apple and Amazon. But while the index soared last year, it has started to dip more recently, mainly due to inflationary pressures and fears that many stocks are overpriced. This was no different on Friday, where the index fell 2%. Some of the largest fallers included DocuSign (which crashed over 40% due to weak forward guidance) and Adobe (which fell over 8% due to similar worries). But I think that many of these tech stocks are now underpriced and here are two I’d buy right now.

A Latin American e-commerce giant

Since it announced that it was raising around $1.55bn through a share issuance midway through November, the MercadoLibre (NASDAQ: MELI) share price has crashed 35%. This is despite the fact that the new shares were issued at $1,550 per share and had a very minimal dilutive effect. As such, its current share price of around $1,050 seems way too cheap and the sell-off looks overdone to me. This is especially true considering that the company is performing excellently, and over the Christmas period, I feel it can improve further.  

Indeed, in the Q3 trading update, the company reported revenues of $1.9bn, a 73% year-on-year rise. This means that revenues have totalled nearly $5bn so far in 2021. Further, I feel that, especially considering the Christmas boost, revenues will be able to reach $7bn for the full year. This puts MercadoLibre on a forward price-to-sales ratio of around just 7. Considering the firm’s excellent revenue growth rate, this seems far too cheap. For example, Amazon has a price-to-sales ratio of around four, yet its revenue growth rate is around five times slower. Like other good tech stocks, MercadoLibre also has diversified revenues due to its fintech business, MercadoPago.

As such, despite the risks of inflation, and the recent rights issue continuing to depress investor sentiment, I think MercadoLibre is way too oversold. I’ll continue to buy this stock on the dip.

A very established tech stock

PayPal (NASDAQ: PYPL) is one of the leaders in the fintech industry, yet it has fallen over 40% from its recent highs, and 16% over the past year. This has mainly been due to fears of rising competition, which includes companies like Square and SoFi. But while such competition does pose a risk, PayPal still seems in an excellent position to continue growing. Indeed, in the recent trading update, it was able to add another 13.3 net new active accounts. It also announced a partnership deal between its subsidiary Venmo and Amazon.

Therefore, I believe that PayPal has maintained a competitive edge over its competitors. As the fintech industry is growing quickly, it should also be in a strong position to capitalise. In fact, it’s already aiming for $50bn in revenues by 2025, around a 100% rise from this year. If it can achieve this, profits should also soar. This demonstrates that the share price still has plenty of upside potential. Accordingly, I’m willing to buy more shares in this established tech stock.  

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Stuart Blair owns shares in MercadoLibre, PayPal Holdings and SoFi Technologies Inc. The Motley Fool UK has recommended Amazon, Apple, MercadoLibre, PayPal Holdings, and Square. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

It was a brutal day on Friday for Docusign (NASDAQ: DOCU) stock as it crashed over 40%. When a stock gets crushed as much as this there’s almost always a catalyst. This time, Docusign released its third-quarter results for its fiscal year 2022.

The results clearly didn’t live up to the market’s expectations, and the shares repriced to reflect this. Let’s take a look to see if Docusign stock is now a bargain for my portfolio.

Docusign’s results

Docusign offers e-signature solutions for users through its cloud-based software suite. The pandemic created huge demand for its e-signature service when most people were working remotely.

The third-quarter results reflected this demand. Revenue grew 42% compared to the same period in fiscal year 2021 (the 12 months to 31 January 2021). Subscription revenue grew even quicker at 44%. The growth in revenue meant adjusted earnings per share surged to $0.58, which was up from $0.22 in the prior year. This is a spectacular growth rate in earnings of 164%.

All seems ok so far. But with any company, the stock is priced on future expectations. This is where Docusign’s update began to falter.

Docusign’s outlook

The key part was when management said: “After six quarters of accelerated growth, we saw customers return to more normalized buying patterns, resulting in 28% year-over-year billings growth.”

The company has recognised that the last six quarters have been excellent. But now, the guidance suggests that this hyper growth phase is over. It’s easy to understand why, as workers are beginning to return to the office.

The fact that the billings growth is slowing is a concerning sign. Billings includes sales that have been booked but not recognised as revenue yet, so it’s a forward-looking indicator for the business. 

The company then guided for fourth-quarter revenue of $560m (taking the midpoint in guidance). Consensus estimates before the update were for fourth-quarter revenue of $574m, so a fair amount higher than the company now expects.

The clear pattern here is that the company has benefited hugely over recent quarters and growth has been spectacular. But it looks like it won’t be in future.

Is Docusign stock a buy?

I think Docusign is a great business, and its software services will continue to be used from here regardless of the pandemic. It’s showing signs of being a quality stock too. The operating margin was 12.4% in fiscal year 2021, and management said this increased to 22% in the third-quarter results, exceeding expectations.

But it comes down to valuation for me. On a forward price-to-earnings ratio, the shares are valued on a multiple of 77. This is just too high for me to get interested, taking into account the slowing growth rate. Although the share price fell over 40% on Friday, I think it might decline further.

It’s not the first company that has released an update containing respectable growth, only for the forward guidance to disappoint. It seems that many US growth stocks are priced to continue on a hyper growth phase, so the outlook has to be strong to warrant the high valuation.

In summary, I think Docusign is a good business, and I might revisit the stock if it becomes cheaper.

Dan Appleby has no position in any of the shares mentioned. The Motley Fool UK has recommended DocuSign. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Over the past week or so, the probability of a stock market crash has increased. The main reason for this is the rise of the Omicron Covid variant around the world. What started out in Africa has now had confirmed cases in many countries worldwide. In fact, here in the UK a report confirmed 246 cases over the weekend. With uncertainty over the future rising, here are a few things I’m considering to protect my FTSE 100 stocks against a negative move.

Noting potential risks and rewards

The main characteristic of a stock market crash is a short, sharp fall in the value of the index. Historic crashes have usually lasted for a month or so before finding a bottom and starting to consolidate. It’s impossible to perfectly time the start or the end of a crash.

With this in mind, I can consider preempting a crash in a couple of ways. One would be to note potential risky stocks that I already hold. If I’m in profit on these, I could look to sell some of the profit to have cash ready. Or I can just put these stocks on a watch list and keep a close eye on them.

The second way is to note the potential rewards by using free cash to buy a cheap UK share in the following months. I could even look to buy more of my existing share holdings, to reduce my average buying price.

Buying defensive stocks for a market crash

Another way I can look to protect myself at the moment is through buying defensive FTSE 100 stocks. I can either buy these on top of my existing portfolio, or look to sell some existing high-risk stocks and reallocate the money to defensive options.

Either way, the focus is that defensive stocks should offer me more resilient performance during tough times. This is because most of the sectors in this area see steady consumer demand for the goods or services provided. Examples include supermarkets, tobacco and alcohol companies, and essential retailers.

Unfortunately, a risk here is that even with the best defensive stock in the world, it could see a share price fall with a market crash anyway. This could be not for fundamental reasons, but because investors are selling out of everything, irrespective of whether it makes sense or not.

Looking for different ideas

The final thing I can consider is buying stocks that have exposure to areas that could do well. For example, gold typically has a negative correlation to stocks. This means that when stocks fall, the gold price traditionally goes up in value.

Therefore, I could looking to buy gold-mining stocks. In theory, if the price of gold rallies, the share prices of these companies should also do well.

Overall, I don’t need to be paralysed with dread over the prospect of a market crash. Rather, I can look to take the above steps ahead of any crash happening.

Jon Smith and The Motley Fool UK have no position in any share mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.